Banking Competition and the Lending Channel: Evidence from Bank-Level Data in Asia and Latin America

Olivero, María Pía; Li, Yuan; Jeon, Bang Nam

doi:10.2139/ssrn.1461928

Cited by 39 publications

(65 citation statements)

References 19 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…It may, for example, depend on the extent of competition in the banking sector. Olivero, Li and Jeon (2011) argue that an increase in competition in the banking sector weakens the transmission mechanism of monetary policy through the bank lending channel.…”

Section: Introductionmentioning

confidence: 99%

Implications of Bank Ownership for the Credit Channel of Monetary Policy Transmission: Evidence from India

Bhaumik

Dang²,

Kutan

2010

SSRN Journal

View full text Add to dashboard Cite

Using bank-level data from India, we examine the impact of ownership on the reaction of banks to monetary policy, and also test whether the reaction of different types of banks to monetary policy changes is different in easy and tight policy regimes. Our results suggest that there are considerable differences in the reactions of different types of banks to monetary policy initiatives of the central bank, and that the bank lending channel of monetary policy is likely to be much more effective in a tight money period than in an easy money period. We also find differences in impact of monetary policy changes on less risky short term and more risky medium term lending We discuss the policy implications of the findings.

show abstract

Section: Introductionmentioning

confidence: 99%

Implications of Bank Ownership for the Credit Channel of Monetary Policy Transmission: Evidence from India

Bhaumik

Dang²,

Kutan

2010

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…This result is consistent with the argument that banks rely more on uninsured debt (Ashcraft, 2006). The choice of short‐term interest rates as a monetary policy stance is therefore a good measure to be used in the panel data regression analysis of the relationship between market structure and bank lending channel since the bank lending channel operates through changes in the mix of deposits in bank liabilities (Olivero et al, 2011).…”

Section: Methodsmentioning

confidence: 99%

“…From an empirical point of view, studies which examine the relationships between the level of competition and the effect of monetary policy on bank lending are those of Adams and Amel (2005), Gunji, Miura, and Yuan (2009) and Olivero, Li, and Jeon (2011). Adams and Amel (2005) use US data to investigate the impact of local bank concentration on monetary policy transmission and find that the impact of monetary policy on loan originations is weaker in more concentrated markets.…”

Section: Introductionmentioning

confidence: 99%

“…Adams and Amel (2005) use US data to investigate the impact of local bank concentration on monetary policy transmission and find that the impact of monetary policy on loan originations is weaker in more concentrated markets. Gunji et al (2009) and Olivero et al (2011) test the impact of H‐statistic (competition measurement) on the transmission of monetary policy and their results show that increased competition in the banking industry leads to a smaller policy effect on bank lending. However, the concentration ratio does not necessarily measure the level of competition (Claessens & Laeven, 2004) and it cannot be used to explain differences in market structure.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The effect of banking market structure on the lending channel: Evidence from emerging markets

Amidu

Wolfe

2013

Rev Financ Econ

View full text Add to dashboard Cite

JEL classification: E4 E5 F3 L1 This paper analyses the extent to which the level of bank competition influences monetary policy transmission. Using a large panel dataset of 978 banks from 55 countries, and employing the Lerner index model as a measure of market structure, our results show that an increase in banking sector competition weakens the effectiveness of monetary policy on bank lending. The findings are robust to a broad array of sensitivity checks including control of alternative measurements of the Lerner index, different samples and different methodological specifications. By extension, these results have important policy implications for regulators in assessing the effectiveness of monetary policy transmission mechanisms.

show abstract

“…This argument is consistent with the results in Gambacorta and Márques-Ibañez (2011) Other recent literature has studied the bank lending channel and its interaction with other features of the financial sector. For example, Olivero et al (2011aOlivero et al ( , 2011 using data for several emerging markets, found that financial sectors with lower competition levels or higher number of consolidation processes are less responsive to monetary policy shocks via the bank lending channel. Similar results are found in Ghossoub and Reed (2015) who study the optimal size distribution of the banking sector as well as the effect of banking concentration on monetary policy transmission.…”

Section: Literature Reviewmentioning

confidence: 99%

The bank lending channel of monetary policy : does the financial structure of banks matter

Gómez-González¹,

Kutan²,

Ojeda-Joya³

et al. 2016

View full text Add to dashboard Cite

This paper tests the importance of the financial structure of banks in the bank lending channel of monetary policy transmission in Colombia, using an unbalanced panel of 51 banks for the period of 1996:4-2014:8. We find that an increase in the interbank rate (proxy of the intervention rate) has a response of a drop in the growth of the total loan portfolio of banks. When we breakdown by type of policy, the bank lending channel works better in times of monetary contraction, exhibiting significant reactions from banks with low levels of solvency rather than those with high solvency. In contrast, when the policy is expansionary, the high solvency banks are the only segment exhibiting the presence of the bank lending channel. We discuss the policy implications of findings.

show abstract

Banking Competition and the Lending Channel: Evidence from Bank-Level Data in Asia and Latin America

Cited by 39 publications

References 19 publications

Implications of Bank Ownership for the Credit Channel of Monetary Policy Transmission: Evidence from India

Implications of Bank Ownership for the Credit Channel of Monetary Policy Transmission: Evidence from India

The effect of banking market structure on the lending channel: Evidence from emerging markets

The bank lending channel of monetary policy : does the financial structure of banks matter

Contact Info

Product

Resources

About